Friday, November 29, 2013

Encana Corp 2

I do not own this stock EnCana Corp (TSX-ECA, NYSE-ECA), but I used to. I had held this stock previously as Alberta Energy Company from April 2000 until August 2002 and made some 18% total returns per year. I had EnCana Corp from February 2006 to November 2009 and made a 9.54% per year total return. I sold this stock in 2009 because I only had 100 shares and the stock was going to split into two companies. I would have ended up with small investment in two companies.

There has been no insider trading over the past 3 months. There has been over the past year $1.0M of insider buying and not insider selling. This buying occurred mid-year and was for $19.00 or less. Insiders not only have Options but also have Restricted Share Units; Rights - Performance Share Unit Plan; Shareholder Appreciation Rights and Deferred Share Units. There does not seem much in the way of insider ownership.

The 5 year low, median and high median Price/Earnings Ratios are 8.86, 10.91 and 12.95. The current P/E Ratio is 18.34 based on a stock price of $20.08 and 2013 earnings estimates of 1.09 CDN$ ($1.04 US$). I get a Graham Price of $13.77. The 10 year low, median and high median Price/Graham Price Ratios are 0.69, 0.89 and 1.08. The current P/GP Ratio 1.46. Both these stock test suggest that the stock price is relatively high.

The 10 year Price/Book Value per Share Ratio is 1.81 and the current one is 2.16 a value some 43% higher. The 5 year median Price/Cash Flow per Share Ratios is 4.62 and the current P/CF Ratio is 5.73 based on a stock price of $20.08 and CFPS of $3.51 CDN$ (and $3.33US$). Both these stock test suggests that the stock price is relatively high. (They just recently lowered the dividend so dividend yield stock test is probably not helpful at this point.)

I know that other people think that this stock price is not high. On an absolute basis, a P/E Ratio of 18.34 or a P/CF Ratio of 5.73 is not that high. It is not cheap, but not expensive either. However mostly the comments on cheapest of this stock is relation to other oil and gas stocks.

When I look at analysts' recommendations, I find Strong Buy, Buy Holder and Underperform recommendations. The consensus recommendation would be a Hold. The 12 month census stock price is $20.90. This implies a total return of 5.5% with 1.47% from dividends and 4.08% from capital gains.

In the Calgary Herald, an article talks about the continuing downsizing of Encana into a smaller more focused company. The market has responded positively to these changes. The site WKRB talks about some analysts' recommendations including coverage just Initiated by Desjardins with a buy rating. The site TSI Network Daily has a review of this stock.

In August of 2013, the site Insider Monkey said hedge funds were buying this stock and that this is a good thing. In a post of last year, Canadian Capitalist makes a good point on the foreign exchange fee charged on US$ dividends paid on Canadian companies, like Encana.

This stock by any measure is not cheap. It has just decreased its dividend some 65% in a major restructuring. Would not be my favourite, but I notice that the Buy and Sell Advisor just include this stock in their dozen stock picks for 2014. See my spreadsheet at eca.htm.

This is the second of two parts. The first part was posted on Thursday, November 28, 2013 and is available here.

EnCana is among the largest natural gas companies in North America. They are focused on natural gas exploration and the development of resource plays. They have a diversified portfolio of assets and hold a highly competitive land and resource position in a number of North America's most promising shale and tight gas resource plays. Alberta Energy Company Ltd. (AEC) and PanCanadian Energy Corporation (PanCanadian) companies merged to form EnCana in 2002. EnCana split into EnCana and Cenovus in 2009. Its web site is here EnCana.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, November 28, 2013

EnCana Corp

I do not own this stock of EnCana Corp (TSX-ECA, NYSE-ECA), but I used to. I had held this stock previously as Alberta Energy Company from April 2000 until August 2002 and made some 18% total returns per year. I had EnCana Corp from February 2006 to November 2009 and made a 9.54% per year total return. I sold this stock in 2009 because I only had 100 shares and the stock was going to split into two companies. I would have ended up with small investment in two companies.

As you can see I do not look on oil companies as a long term buy. Also, please note that my spreadsheet following this company starts with Alberta Energy Company and follows this company into the formation of EnCana in 2002. It was in 2002 EnCana was formed with the merger of AEC and PanCanadian Energy Corporation. Company split into EnCana Corp and Cenovus Energy Inc. in 2009, Oil with Cenovus and gas with EnCana.

Until this year, this company has kept dividends at $.80 US$. As part of their new strategy they have decreased their dividend by 65% to $.29 US$. This reduces their dividend from a 3.98% yield to a 1.47% yield. With their new strategy EnCana hopes to give better total returns to their shareholders. They say they are aligning the dividend with cash flow and hope to average a 10% annual growth rate in cash flows. This implies that they might in future raise the dividends.

See EnCana's press release at the G&M entitled "EnCana Announces Vision and Strategy, Bold Action Underway".

Total returns on this stock have not been great over the past 5 but good over the past 10. This company's stock has not done well as the stock price has really just been declining since the split in 2009. The total return over the past 5 years to date is a negative 4.19% per year with a capital loss of 7.32% per year and dividend income 3.13% per year.

Neither the returns over the past 5 years nor the total returns over the past 10 years really matter much as the company says they have a new strategy to make money for the shareholders which includes a much lower dividend yield.

Over the past 5 years outstanding shares have not changed. Shares were increased due to Stock Options, Share Issues and DRIP and were decreased due to buy backs.

Revenue has been decreasing from 2009 to 2012, but is expected to increase by 15% in 2013. If you look at revenue over the 12 month period to quarter 3, revenue has increased by 17%. This would seem that the analysts are probably right on revenue estimates.

With Earnings per Share, they have also decreased from 2009 to 2012 and the analysts here expect a positive EPS of $1.04. The 12 month EPS to the end of the third quarter is $0.56. Since according to the December 2012 Interim report says there was a $.80 loss in that quarter, it would appear that the analyst might be right on EPS estimates.

The comprehensive income has varied from the net income a lot since 2009, both being higher and lower. The variance for 2012 was only 3% and it is 3% also for the 12 month period of the third quarter. If the analysts are right, there should be a decent ROE of around 13% for 2013.

The Liquidity Ratio has varied a great deal from a low 1.03 to a high of 2.10 since 2009. The current ratio is good at 1.56. One of the changes that EnCana says they want with the new strategy is a stronger balance sheet, so hopefully the new ratio is a sign of this.

The Debt Ratio has generally been fine since 2009, but the current one at 1.42 is a little low. I prefer one at least at 1.50 or above. The Leverage and Debt/Equity Ratios are a little high at 3.40 and 2.40. They used to be better. Hopefully these ratios will also improve with the new strategy.

The company has a new strategy which includes lower dividends. It has not done particularly well since the split off of Cenovus. So a new strategy is a good idea. See my spreadsheet at eca.htm.

This is the first of two parts. Second part will be posted on Friday, November 29, 2013 and will be available here.

EnCana is among the largest natural gas companies in North America. They are focused on natural gas exploration and the development of resource plays. They have a diversified portfolio of assets and hold a highly competitive land and resource position in a number of North America's most promising shale and tight gas resource plays. Alberta Energy Company Ltd. (AEC) and PanCanadian Energy Corporation (PanCanadian) companies merged to form EnCana in 2002. EnCana split into EnCana and Cenovus in 2009. Its web site is here EnCana.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Wednesday, November 27, 2013

Chesswood Group Ltd

On my other blog I am today writing about recent book reviews that I have done ...continue...

I do not own this stock Chesswood Group Ltd (TSX-CHW, OTC-CHWWF). A reader wrote me that he was doing research and found a company that he hoped I could give me a brief outlook on. He said that the company is Chesswood Group and they are basically a financial leasing company.

The information he gave about dividends was that in 2009 they increased dividends from 2.5 to 3.0 cents per month. In 2010 they increased dividends to 3.5 and to 4.0 and to 4.5. In 2011 they increased dividends to 5.0 and this year increased again to 5.5per month. He writes that he knows that I like that sort of a trend. They do not appear to have much long term debt but in 2011 seemed to really increase leasing obligations and in 2011 cash flow was negative. Currently they are yielding about 7.5%

So, let's first look at the dividends. The dividends were increased since 2009. However, what is not mentioned is that dividends were decreased by 74% over 2008 and 2009. The 5 year dividend growth rate is a negative 6.7% per year. This stock shows the problems of only looking at that last few years instead of looking only at the past few years. This company has only been public since 2006. I prefer companies that have at least been on the stock exchange for at least 10 years.

When I last reviewed this stock last year there was lots I did not like. The Dividend Payout Ratio for EPS was too high, the dividends increases were higher than EPS and CFPS increase and the Liquidity Ratio was too low. I thought it would be a plus if there was lots of insider ownership, which I did not find.

There was one analyst that thought Revenue would raise significantly and with it a good rise in EPS. I thought the rosy future was just speculation. There is nothing in the past that supports it as far as I can see. Well, the analyst turns out to have been right as far as the stock rising is concerned.

There has been a small rise in revenue in 2012 around 6%, but over the past 5 years revenue has fallen. However, was a strong rise in earnings, and EPS is some 37.5% from last year. Overall earnings are up only 3.68% per year over the past 6 years. I have no other growth figures as there are too many years of negative earnings.

I also had the wrong figures for revenue when I originally updated my spreadsheet and this has been corrected. I misread the statements. They do not make things easy. Also, they still are not stating what their current assets and current liabilities are. None of this is good.

One interesting point is that the company consolidated the shares 100 to 1 and then did a split of 100 to 1. They offered to repurchase shares for anyone after the split that hid less than 100 shares. This maneuver effectively got rid of shareholders with less than 10,000 shares. (At an average price of $7.73 in 2012, this means $77,000 of shares.) And, any small stockholder would have been shut out the recent stock rise.

In actual fact this company had been around prior to 2006 as G&M has financials on this company prior to 2006. I cannot find financial statements prior to 2006, even on Sedar. From the 2006 statements, I cannot figure out exactly how the company morphed into an income trust. I also do not want to spend much time trying to figure this out as I still do not much care for the company.

There seems to be only one analyst following this stock. He has high expectations of it. He still has a buy rating on this stock. His 12 months stock price is $17.00 which is just 2.84% higher than it is today. His price gives this stock a total return of 7.14% with 4.30% from dividends and 2.98% from capital gains.

Earnings and cash flow growth seems in 2013 to be at least matching growth in dividends. However, the revenue growth does not seem to be there. The DPR for earnings seems to be coming down and is expected to be around 70% in 2013. Certainly, current investors have been making money as the stock price went up some 83% so far this year.

As far as the current price goes, with a current P/E Ratio of 16.37 based on a stock price of $16.53 and a 2013 earnings estimate of $1.01, is higher than the 5 year median high P/E of 11.92. However, a P/E Ratio of 16.37 on an absolute basis is not that high. If you look at the Price/Book Value per Share Ratios, the 10 year median P/B Ratio is 0.75 (a very low ratio), the current one at 3.18 is some 312% higher and is quite high.

I get a Graham Price of $10.87 and the current P/GP Ratio is at 1.52. The P/GP Ratios on this stock have always been quite low with a median high P/GP at just 0.83. However, a P/GP Ratios of 1.52 is rather high on an absolute basis.

This is a rather small cap stock with only one analyst following it. It seems to me to be at a rather high current price. You got to wonder at the maneuver it did in 2011 to get rid of small shareholders. (I cannot find why it did this as the company just said that it was approved by the board.) Would not be a company I would consider buying, especially at this time. See my spreadsheet at chw.htm.

Chesswood Group Limited is a financial services company operating primarily in the specialty finance industry. Chesswood's approach is to acquire financial services businesses. It owns Pawnee Leasing Corporation, located in Fort Collins, Colorado, is Chesswood's largest operating company. Pawnee's assets comprise approximately 75% of Chesswood's consolidated assets. Chesswood recently added Case Funding Inc., a U.S. legal finance company, to its specialty finance portfolio. Chesswood owns of one of the larger Acura dealers in Canada, Acura Sherway, in addition to Canada's only eDealer, cars4U.com. Its web site is here Chesswood Group.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Tuesday, November 26, 2013

CCL Industries Inc. 2

I do not own this stock CCL Industries Inc. (TSX-CCL.B, OTC-CCDBF). In 2009 I read a favorable report on this stock which I had also heard of this stock before. This is also a dividend paying stock and was and is on is on the Dividend Aristocrats list.

When I look at the insider trading reporting, I find no insider buying and $31.4M of insider selling of which $9M was done by the CEO. The insider selling seems to be all options selling. Commonly insiders consider options part of their salaries and tend to sell off options when they can do so. Most of the selling happened in the early part of 2013. There has been not action in last month. Insiders have options and also Rights Restricted Share Units and Rights Deferred Share Units.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.69, 13.22, and 15.03. The current P/E Ratio is 24.23 based on a stock price of 24.93 based on a stock price of $84.02 and 2013 EPS estimate of $3.37. The stock test suggests that the stock price is high.

Analysts have been pointing out that we should look at the 2014 P/E Ratio because the stock is rising due to the recent purchase of Avery Dennison. If we do that I get a P/E of 15.50 based on a current stock price of $84.02 and 2014 EPS estimate of $5.42. Unfortunate or maybe fortunate for current shareholders, the stock price has been rising steeply lately and this P/E Ratio is also rather high.

The 10 year Price/Book Value per Share is 1.39 and the current one is 2.93. The current P/B Ratio is some 110% above the 10 year median and this stock price test suggests that the stock price is high.

I get a current Graham Price of $46.64. The 10 year low, median and high median Price/Graham Price Ratios are 0.74, 0.85 and 0.96. The current P/GP Ratio is 1.80. I get a Graham Price of $59.15 for 2014 and a P/GP Ratio of 1.42. On a relative basis the stock price is certainly quite high.

The 5 year median dividend yield is 2.2% and the current dividend yield is just 1.20% a value some 53% lower. This test also suggests that the stock price is rather high. We are in a bull market currently and people get over exuberant in these times. Also, this stock is having quite a bull run and perhaps people are getting too exuberant about this stock. It would seem that no matter how you slice and dice it, the stock is probably above what you should be paying for it.

There is not many analysts following this stock, but they all give a recommendation of Buy. The 12 month consensus stock price is $92.30. This implies a 12 month total return of 10.87, with 9.85% from capital gains and 1.02% from dividends.

There is a short article by Motley Fools. In mid-November, the author thought that the price of $78.50 was perhaps too bullish. The site Zolmax talks about BMO rising their 12 month stock price to $90 from $80 while Scotiabank lowered theirs from $91 to $88. A blogger called Dividend Gangster did a good review of this stock in October of 2012.

I think that this is a good company. However, I do feel that it is overpriced. See my spreadsheet at ccl.htm.

This is the second of two parts. The first part was posted on Monday, November 25, 2013 and is available here.

CCL Industries Inc. provides state-of-the-art specialty packaging solutions to some of the world's largest producers of consumer brands in personal care, cosmetic, healthcare, household and specialty food and beverage products. CCL is the world's largest supplier of innovative and secure labeling solutions to leading global companies in the consumer product and healthcare sectors and supplies aluminum containers and plastic tubes for major consumer brands of personal care, household products and specialty food and beverages. With headquarters in Toronto, Ontario, Canada, CCL Industries operates production facilities in North America, Europe, Latin America, Asia and Australia. Its web site is here CCL Industries.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Monday, November 25, 2013

CCL Industries Inc.

On my other blog I am today writing about the updating information on Dividend Growth Stocks and their historical yields ...continue...

I do not own this stock CCL Industries Inc. (TSX-CCL.B, OTC-CCDBF). In 2009 I read a favorable report on this stock. I had also heard of this stock before. This is also a dividend paying stock and was and is on is on the Dividend Aristocrats list.

Dividends are decent and dividend increases are decent. The 5 year median dividend is 2.2% and the 5 and 10 year dividend growth is at 10% and 87% per year. The most recent dividend in 2013 was for 10.3% and the current dividend is 2%.

The 5 year median Dividend Payout Ratios are 30% for EPS and 12.7% for CFPS. The DPR for 2012 was 27% for EPS and 13% for CPFS. On stock purchased today, you might be earnings just over 4% in yield in 10 years' time and over 6% in year in 15 years' time.

Over the past 5 and 10 years there has been little change in the number of outstanding shares. Shares have increased due to Share Issues and Stock Options and have decreased due to Buy Backs. Also Class A shares have converted to Class B. Shares.

Revenue is up by 2.7% per year over the past 5 years, but down by 2.5% per year over the past 10 years. Revenue per Share is up by 2.1% per year over the past 5 years, but 2.6% per year over the past 10 years. However, if you look at the 5 year running average, Revenue per Share is down by 1.5% and 1.8% per year over the past 5 and 10 years.

The 10 year Revenues have been affected Custom Manufacturing Division in 2005. I would think that future revenues will be affected by the recent purchase of Avery Dennison in 2013.

The EPS have declined over the past 5 years, but have increased over the past 10 years. The decline was at 8.3% per year over the past 5 years. The EPS have increased by 16% per year over the past 10 years. Using 5 year running averages the EPS have decreased by 7.5% per year over the past 5 years and increased by 8.3% per year over the past 10 years.

The Cash Flow per Share is a bit better with increases of 2.3% per year and 3.9% per year over the past 5 and 10 years. If you look at 5 year running averages, the CFPS has increased by 3.4% and 3.4% per year over the past 5 and 10 years. The value to using the 5 year running averages is that exact 5 or 10 years ago, a company could have an extraordinary year or a really bad year and this could distort the growth over the particular period involved.

The Return on Equity for 2012 was 11% and was the best this company has had since 2007. However, it has not often been at or above 10%. Lots of years the ROE was closer to 4 and 5%. So this company has no stellar performance on the ratio. The comprehensive ROE for 2012 was 9.9%, which is almost 10% lower than for the net income ROE. This is not too bad. However, the ROE on comprehensive income has varied quite a bit at times from that of net income since 2006, when they first started to publish information on comprehensive income.

The current Liquidity Ratio is 1.65. The Liquidity Ratio for 2012 was 1.48. The 5 year median Liquidity Ratio is 1.48. This Ratio is fine, but I would prefer it to be at or over 1.50 consistently. The Debt Ratio has generally been better and it is currently at 1.65 with a 2012 ratio of 2.16 and a 5 year median ratio of 1.95. The Leverage and Debt/Equity Ratios for 2012 was at 1.86 and 0.86 and these are better than usual, as the 5 year median ratios are 2.27 and 1.27, respectively.

The 5 and 10 year total return on this stock was at 4.65 and 10.11% per year over the past 5 and 10 years to the end of 2012. The capital gain portion of this return was at 2.94% and 8.25% per year and the dividend portion of this return was at 1.66% and 1.88% per year over these periods.

The stock price has risen by some 90% this year. The total return to date is a lot higher at 28.52% and 17.55% per year over the pas5t 5 and 10 years with capital gains at26.70% and 15.96% and dividends at 1.81% and 1.59% per year over these periods. This big rise in stock is connected with the purchase of Avery Dennison this year.

This is an industrial stock and I think it has shown it can produce solid results. It has a decent dividend and a decent history of dividend increases. Investors, with this stock, can diversify into industrial stocks with a company that will produce increasing dividends and long term gains. See my spreadsheet at ccl.htm.

This is the first of two parts. Second part will be posted on Tuesday, November 26, 2013 and will be available here.

CCL Industries Inc. provides state-of-the-art specialty packaging solutions to some of the world's largest producers of consumer brands in personal care, cosmetic, healthcare, household and specialty food and beverage products. CCL is the world's largest supplier of innovative and secure labeling solutions to leading global companies in the consumer product and healthcare sectors and supplies aluminum containers and plastic tubes for major consumer brands of personal care, household products and specialty food and beverages. With headquarters in Toronto, Ontario, Canada, CCL Industries operates production facilities in North America, Europe, Latin America, Asia and Australia. Its web site is here CCL Industries.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Friday, November 22, 2013

Cenovus Energy Inc 2

On my other blog I am today writing about the secular bear market we are in ...continue...

I do not own this stock Cenovus Energy Inc. (TSX-CVE, NYSE-CVE). This is another stock that was talked about at the 2010 Money Show in Toronto. There were those who liked oil companies and they mentioned both Suncor Energy Inc. (TSX-SU) and Cenovus Energy Inc. (TSX-CVE). This company was split off from EnCana in 2009. This was the oil part of EnCana and EnCana now is just a gas play. My spreadsheet reflects this split.

Over the past 30 days officers have cash in options or sold stock worth around $530,000. This is not a good sign. However, people sell for all sorts of reasons and the only insider trading that tells you anything is insider buying.

The 5 year low, median and high median Price/Earnings per Share Ratios are 18.70, 21.96 and 25.21. P/E Ratios have gone up as the 10 year low, median and high median P/E Ratios are 12.47, 14.85 and 18.07. I think that the 5 year median P/E Ratios are a little high. The current P/E Ratio is 17.94 based on a stock price of $30.50 and 2013 earnings estimate of 1.70. However, the earnings estimate is about 30% higher than last year's earnings. The 12 month earnings to September 30, 2013 are just $0.80 which gives a P/E of 38.13, which is quite a high P/E.

I get a Graham Price of $22.61 and the 10 year low, median and high median Price/Graham Price Ratios are 1.00, 1.13 and 1.37. The current P/GP Ratio is 1.35. This stock test suggests that the stock price is a bit high.

I get a 10 year median Price/Book Value per Share Ratio of 2.22 and the current P/B Ratio is only 3% higher at 2.28. This stock test suggests that the stock price is reasonable.

The 5 year median dividend yield is 2.76% and the current yield is 15% higher at 3.17%. This is good and shows that the stock price is reasonable to cheap. Also, using historical dividend yields, the current yield is about the historical high. On this testing, the stock price is cheap.

When I look at the analysts' recommendations, I find Strong Buy and Buy recommendations. Since most of the recommendations are a Buy, the consensus recommendation would be a Buy. The 12 months stock price consensus is $38.50. This implies a 29.4% total return with 3.17% from dividends and 26.3% from capital gains.

The Motley Fool has a review of this stock. It talks about the fact that this company is sitting on a lot of oil. An article in Bloomberg quotes John Stephenson about how he currently prefers Canadian Natural Resources Ltd. (TSX-CNQ) to this stock.

Oil prices seem to be recovering and this stock is rather cheap. However, the question is can they make earnings and cash flow from the rise in oil prices. See my spreadsheet at cve.htm.

This is the second of two parts. The first part was posted on Thursday, November 21, 2013 and is available here.

Cenovus Energy Inc. is an integrated oil company. The Company's operations include enhanced oil recovery (EOR) properties and established crude oil and natural gas production in Alberta and Saskatchewan. It also has ownership interests in two refineries in Illinois and Texas, United States. Its web site is here Cenovus.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, November 21, 2013

Cenovus Energy Inc

I do not own this stock Cenovus Energy Inc. (TSX-CVE, NYSE-CVE). This is another stock that was talked about at the 2010 Money Show in Toronto. There were those who liked oil companies and they mentioned both Suncor Energy Inc. (TSX-SU) and Cenovus Energy Inc. (TSX-CVE). This company was split off from EnCana in 2009. This was the oil part of EnCana and EnCana now is just a gas play. My spreadsheet reflects this split.

I have dividend data going back to 1992, but note that this company split from EnCana in 2009. Dividends on this stock have gone up and down. This has happen even since 2009. Despite the dividend ups and downs, the 5 and 10 year growth in dividends are 18% and 19% per year. The most recent dividend increase is 10% in 2013.

The total return to the end of 2012 over the past 5 and 10 years is at 2.93% and 13.32 per year with 0.32% and 10.92% per year from capital gains and 2.62% and 2.40% per year from dividends. The total return to date for the past 5 and 10 years is 4.98% and 12.28% per year with 1.98% and 9.36% per year from capital gains and with 3% and 2.92% from dividends.

The current dividend yield is 3.17% which is a little higher than shareholders got over the past 5 and 10 years in dividends per year. The Dividend Payout Ratios are 61% for earnings and 20% for cash flow. The DPR for 2012 and 2013 are similar. However, the DPRs are the higher than they used to be in the past. The higher DPRs started in 2009. This is the same year that the split from EnCana occurred.

The outstanding shares have not changed that much over the past 5 and 10 years with no change over the past 5 years and a decrease in outstanding shares over the past 10 years of 2.3% per year. Shares have changed because of Stock Options, Share Issues and Buy Backs.

The growth in Revenue per Share using 5 year running average over the past 5 and 10 years show growth of 17% and 13% per year. The growth in revenue per Share since 2009 is running at 11% per year. So growth has been good. Analysts expect Revenue to growth around 4% in 2013 and growth in Revenue per Share over the past 12 month to September 30, 2013 is at 4.6%.

The growth in EPS has not been as good. Using the 5 year running averages, I get 5 and 10 year growth at 0% and 10% per year. Growth since 2009 is at 6.3% per year. Analysts have expected growth in earnings for 2013 to be around 30%, but 12 month growth in earnings to the end of Quarter 3 is negative and it is down almost 40%.

Growth in Cash Flow per Share over the past 5 and 10 years, using 5 year running average is at 4.2% and 8% per year, respectively. Since 2009, there has been no growth in Cash Flow per Share and CFPS is down by 2.3% per year. Analysts expected CFPS to be up by around 3.6% in 2013, but to the end of Quarter 3 over the past 12 months, CFPS is down by 3%.

So we have good growth in Revenues, and not bad growth in Cash Flow, but Earnings are not keeping up. Since 2009 Revenue growth is good and Earnings growth is fairly good, but there is no growth in Cash Flow.

Return on Equity has been fairly good over the past 3 years. The 5 year median ROE to the end of 2012 was at 10.1%. The 5 year median ROE on comprehensive income to the end of 2012 is a bit lower at 9.9%. This does not quite break into 10% level, which is where you want it. If you look at ROE for the 12 months to the end of Quarter 3, you get one of only 6%. However, the ROE for comprehensive income to the end of the third quarter is a bit better at 6.9%. However, 6.95 ROE is still not a very good ROE number.

The Liquidity Ratios have always been rather low, but above 1.00 over the past 5 years. The current Liquidity Ratio 1.34. If you add in cash flow after dividends, this ratio is around to 2.00. The Debt Ratio has generally been quite good and the current one is 1.69. The current Leverage and Debt/Equity Ratios are ok for an oil producing company at 2.44 and 1.44.

As with other oil and gas producing companies, it has not done much lately, especially in regards to stock price. Our oil prices are below North American prices and world prices. This was one of things that speakers at the recent Toronto Money Show talked about. However, this will not last forever.

I think a dividend over 3% is a good one. However, dividends paid could vary in the future. It also remains to be seen how this company will change from the original EnCana stock. See my spreadsheet at cve.htm.

This is the first of two parts. Second part will be posted on Friday, November 22, 2013 and will be available here.

Cenovus Energy Inc. is an integrated oil company. The Company's operations include enhanced oil recovery (EOR) properties and established crude oil and natural gas production in Alberta and Saskatchewan. It also has ownership interests in two refineries in Illinois and Texas, United States. Its web site is here Cenovus.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Wednesday, November 20, 2013

Canadian Oil Sands 2

On my other blog I am today writing about other possible web sites to use instead of Globe & Mails site...continue...

I do not own this stock Canadian Oil Sands (TSX-COS, OTC-COSWF). I am reviewing this stock because when anyone talks about investing in Canadian Oil Sands, this is the stock that seems to be mentioned first. As with some other investment in oil companies, if the dividend is good, then it will vary according to the price of oil.

In the past 30 days, there was approximately $225,390 of insider selling and $47,728 of insider buying. This is a negative. The CEO owns a lot of shares and they are currently valued at some $27M. He also has a lot of stock options and they are valued at some $47M.

The 5 year low, median and high median Price/Earnings Ratios are 9.24, 11.57 and 17.41. The current P/E Ratio is 10.94 based on a current stock price of $20.89 and 2013 earnings estimate of $1.91. Analysts expect the earnings to decline in 2013 by around 5.5%. If you look at the 12 month earnings to the quarter 3, the earnings have declined by almost 12% to$1.78. If in this calculation you use the 13 month earnings you get a P/E of 11.74. Both these P/E ratios show that the stock price is reasonable as they both show a P/E Ratio median P/E Ratio.

I get a Graham Price of $20.45 and the 10 year low, median and high median Price/Graham Price Ratios are 0.89, 1.37 and 1.66. The current P/GP Ratio is 1.02. This stock price test says that the stock price is relatively reasonable to cheap.

The 10 year Price/Book Value per Share Ratio is 2.96 and the current P/B Ratio is 2.15 a value some 73% of the 10 year ratio. This stock price test shows that the stock price is cheap.

The 5 year dividend yield is 6.17% and the current dividend yield at 6.7% is some 8.6% higher. This stock price test shows that the current stock price is reasonable to cheap. If you look at historical high and low dividend yields, the current yield is less than the historical average and therefore shows that the stock price is cheap.

When I look at analysts' recommendations, I find only Hold recommendations and the consensus recommendation would be a Hold. The 12 month consensus stock price is $21.00. This implies a total return of 7.23% with 6.7% from dividends and 0.53% from capital gains.

The financial post has an opinion piece by Sarah Dobson from an environmental group saying that "Tar sands are sticky business". However, I recently read a report from a professor who said that the real problem with global warming is burning of coal, not oil or gas. If we burn all our oil and gas there might be increased warming, but not greenhouse.

However, burning our coal is different. Half of the US gets their electricity from coal plants. China is still increasing the number of coal plants it uses to produce electricity. Germany has started to build coal plants also because they have coal and they want to get away from using nuclear energy because of what happened in Japan. Has Germany ever had a tsunami?

Another Financial post article by Bloomberg says that Canadian oil sands companies trail global peers in reporting environmental performance. There is a report on this company by Motley Fool.

The thing is if you are a long term investor, you want to buy good companies when the stock price is relatively cheap. That is how you do well in investing over the long term. If you had your eye on buying this stock, is the time to do so. You do not wait until it is expensive to buy. Yes, you may have to wait to get returns and the analyst may be right that the capital gain return over the next year will be low. But if you are a long term investor, this should not matter. See my spreadsheet at cos.htm.

This is the second of two parts. The first part was posted on Tuesday, November 19, 2013 and is available here.

Canadian Oil Sands Trust provides a pure investment opportunity in the oil sands through its 36.74% interest in the Syncrude Project. Syncrude is an experienced oil sands operator, producing a high-quality crude oil for the past 30 years. With large, bitumen-rich leases located in the sweet spot of the Athabasca oil sands deposit and a fully integrated upgrading facility that produces 100% light, sweet crude oil, the quality of their Syncrude asset is very good. Its web site is here CDN Oil Sands.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Tuesday, November 19, 2013

Canadian Oil Sands

I do not own this stock Canadian Oil Sands (TSX-COS, OTC-COSWF). I am reviewing this stock because when anyone talks about investing in Canadian Oil Sands, this is the stock that seems to be mentioned first. As with some other investment in oil companies, if the dividend is good, then it will vary according to the price of oil.

The current dividend is good at 6.7% and this stock has a 5 year median dividend of 6.2%. I have dividend information going back to 1996. Over that time dividends have both gone up and down. Over the past 5 years dividends have decline by 3.9% per year. Over the past 10 years dividends have increased by 12.9% per year.

Another way to look at dividends is to see what you might be earning on your original purchase price after 5 or 10. For this stock the median current return after 5 and 10 years is 8.9% and 21%.

When I look at the 5 year median Dividend Payout Ratio it looks a bit high at 101%. However, if you look at the DPR with 5 year average dividend and 5 year average EPS, the DPR is 87%. The 5 year median DPR for cash flow is fine at 57%.

The total return over the past 5 years to the end of 2012 is a loss of 6.42% per year with a capital loss of 12.22% per year and dividend income at 5.81% per year. The 5 year total return to date is better, coming in at 6.05% per year with a capital loss of 0.2% per year and dividends at 6.25% per year. The total return for the last 10 years to the end of 2012 and to date is very similar. The total return to date is at 19.19% per year with 8.91% per year in capital gains and $10.28% per year in dividends.

The outstanding shares have increased by 0.2% per year and 5.33% per year over the past 5 and 10 years. The shares have increased due to stock options, DRIP and Share Issues. If you look at revenue per share growth using the 5 year running averages, it has grown at the rate of 11% and 15% per year over the past 5 and 10 years.

Earnings growth is not as strong. Using the 5 year running averages, I get growth of 7.8% and 14% per year over the past 5 and 10 years. Cash Flow per share growth is also quite good looking at the 5 year running averages, with growth at 9.7% and 15% per year over the past 5 and 10 years.

The Return on Equity has mostly been above 10% with the 5 year median at the end of 2012 at 22.4%. The ROE on comprehensive income is similar at 22.3%.

Debt ratios are current good, with the Liquidity Ratio at 1.80 at the end of 2012, but dropping lower in the 3rd quarter to just 1.24. The Debt Ratio is very good 1.80 for 2012 and 1.87 for the 3rd quarterly report. The current Leverage and Debt/Equity Ratios at 2.15 and 1.15 are a little high, but not unusual for an energy producer.

With this stock, if can afford to take the risk of investing in an energy producer and can put up with variable dividends, you can make quite good dividends over time. See my spreadsheet at cos.htm.

This is the first of two parts. Second part will be posted on Wednesday, November 20, 2013 and will be available here.

Canadian Oil Sands Trust provides a pure investment opportunity in the oil sands through its 36.74% interest in the Syncrude Project. Syncrude is an experienced oil sands operator, producing a high-quality crude oil for the past 30 years. With large, bitumen-rich leases located in the sweet spot of the Athabasca oil sands deposit and a fully integrated upgrading facility that produces 100% light, sweet crude oil, the quality of their Syncrude asset is very good. Its web site is here CDN Oil Sands.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Monday, November 18, 2013

Brookfield Office Properties

On my other blog I am today writing about Bicycle Riding in Toronto...continue...

I do not own this stock of Brookfield Office Properties (TSX-BPO, NYSE-BPO). In November 2008, I was looking at some stocks on the Dividend Aristocrats List that I do not own. The first one I found was Brookfield Properties (TSX-BPO). I did not know this stock and had not tracked it, so I took a look at it.

Here you meet the problem with the Dividend Aristocrats List. This is stock was taken off the list because it has not raised its dividend since 2008. This list changes often enough that may make it an unreliable source to find new good stocks. But when I was looking at it in 2008, many people felt that the stocks on such a list were the best.

Looking at the insider trading report, I see that lots of people have options, but there is not that much share ownership except for a few directors. Two directors own shares and one owns shares worth $3.4M and one owns shares worth $6.6M. The biggest shareholder is Brookfield Asset Management Inc. which owns around 49% of the outstanding shares.

Looking at past history, it looks like the company paid dividends between 1991 and 1993 and then stopped them. They were restarted in 1997. They increased their dividend every year until 2008. Since 2008 the dividends have remained flat. The main reason I can see is that their Dividend Payout Ratios were too high. This was especially true of DPR for cash flow.

The DRPs for 2012 financial year was 24.9% for earnings and 46.6% for cash flow. These ratios are expected to be higher for 2013 at 49% for earnings and 59% for cash flow. Earnings are expected to go down a lot (49%) in 2013 and cash flow to go up a lot (31%) in 2013. However, the third quarterly results are in and if you look at the last 12 months to September 30, 2013, earnings have gone down slightly (1.3%) and cash flows gone down a lot (20%).

Until 2006 the EPS/CF Ratio was below 1.00. Since 2006, this ratio has been above 1.00 except for 2009. This is not a good sign. Healthy companies tend to have this ratio under 1.00. That is they have EPS lower than CFPS. Because the dividends are currently paid in US$, it means that for Canadian shareholders, the dividends will fluctuate with the US$-CDN$ exchange rates.

Return on Equity was rather low for this company until 2006 when it broke above 10%. It has been above 10% ever since with the current 5 year median ROE at 11.1%. As of the 3rd quarter of 2013, the ROE comprehensive income is almost 9% higher than the ROE on net income. This is good.

The Liquidity Ratio has been very low and the current ratio is just 0.39. This means that the current assets cannot cover the current liabilities. The Debt Ratio is quite good at 1.89. The current Leverage and Debt/Equity Ratios are at 2.12 and 1.12, respectively and are normal for a real estate company.

When I look at analysts' recommendations, I find Buy, Hold, Underperform and Sell recommendations. Most of the recommendations are a Hold and the consensus recommendation would be a Hold. The 12 months stock price consensus is $19.20 and this implies a negative total return with 2.94% from dividends and a capital loss of 3.37%.

When I look at Price/Earnings Ratios, I find a very big difference between the 5 year median ratios and the 10 year median ratios. The former ratios are less half of the later. The 5 year low, median and high median P/E Ratios are 4.66, 6.91 and 8.17. The 10 year low, median and high median P/E Ratios are 10.30, 14.03 and 17.77. The 5 year median P/E Ratios are quite low, but maybe this reflects the lack of dividend increases because of earnings and cash flow problems.

The current P/E Ratio is on the high side of both of these at 16.69 based on a stock price of $19.87 and 2013 earnings estimates of 1.14. If you use the 12 months EPS to the end of September 2013, the P/E Ratio is much lower at 8.57.

If you test using the Graham price, which is currently at $24.25, the price is good as the Price/Graham Price Ratio is current at 0.82. It is below 1.00. The 10 year low, median and high median P/GP Ratios are 0.74, 0.97 and 1.21. So the stock price is low to reasonable on a relative basis also. The 10 year Price/Book Value per Share Ratio is 1.85 and the current P/B Ratio is 0.91. A stock is cheap when this ratio is below 1.00 and the current one is also some 49% of the 10 year ratio.

However, if you look at the dividend yield, the current dividend yield at 2.93% is some 17% lower than the 5 year median dividend yield of 3.57%. On this basis the stock is getting expensive. It is considered expensive when the current dividend yield is 20% higher than the 5 year median dividend yield.

There is an article in October 2013 in the G&M on this stock which says that the company will report stable funds from operations and operating income in the third quarter of 2013. An article in Seeking Alpha says this company is out-of-favor and undervalued. According to The Motley Fool Brookfield Property Partners LP (TSX-BPY.UN) will acquire the 49% of this company it does not already own. The company's stock went up because of this. This should happen in the early part of 2014.

Not a dividend growth company anymore, so I am not interested in this stock. It also looks like it might soon be bought out, so is not a long term buy. See my spreadsheet at bpo.htm.

Brookfield Properties is a leading North American commercial real estate company that invests in premier-quality office properties in high-growth markets driven by financial service, government, and energy tenants. The portfolio is composed of office properties in 12 top U.S. and Canadian markets. Its web site is here Brookfield Office Properties.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Friday, November 15, 2013

Northland Power Inc

On my other blog I am today writing an overview of World Money Show of Toronto 2013...continue...

I do not own this stock Northland Power Inc. (TSX-NPI, OTC-NPIFF). This company is into generating electric power. I have a lot invested in pipelines and I would like to have more invested in electric power as my utilities investment. I read a report on this stock that said it was a good defensive stock to buy. That is, it is a good stock to hold in a stock market correction. I can certainly see the logic of using utility stocks as defensive stocks.

The thing I noted when I was updating by spreadsheet was that analysts keep thinking that this company will earn money, but each year it seems to have another loss as far as earnings go. For example in my 2011 review, EPS estimates for 2011 and 2012 were $1.05 and $1.07. The 2011 EPS was a loss of $.61. In my 2012 review, analysts' estimates for earnings for 2012 and 2013 were for $0.14 and $0.31. The 2012 EPS was a loss of $0.18.

However, the analysts' optimism has finally paid off. The EPS estimates for 2013 are at $0.93. The 12 months EPS to September 30, 2013 is at $0.91. However, for me to prove you can earn money, I would like to see a few years of earnings before I believe. But, EPS are going in the right direction.

This company was also an old income trust. When they changed to a corporation, they kept the dividends level, although, by corporation standards, they could not afford them. Their EPS Payout Ratio was always high, but the real problem lately is low and negative earnings. Their earnings per share have declined by 18% and 13% per year if you look at the 5 year running average over the last 5 and 10 years.

Net Income is down by 22% and 11% per year if you look at the 5 year running average over the past 5 and 10 years. The difference between EPS and Net Income growth (or non-growth) is because the company has increased their outstanding shares by 14% and 14.6% per year over the past 5 and 10 years. Call me old fashion, but I like my investment companies to earn money.

The one plus I see is that management does have money in this company. The company says that management ownership is at 39%. The CEO has shares worth $29.4M and an officer has shares worth $23.5M. Over the past year there was only insider selling and it was at $0.3M. This selling occurred early in the year.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation is a Buy. (Most stocks have this rating.) The 12 month stock price consensus is $18.70 and this implies a total return of 23.39% with 16.66% from capital gains and 6.74% from Dividends.

I do have 5 year low, median and high median Price/Earnings per Share ratios and they are 9.40, 11.28 and 13.16. These are reasonable for a utility. The current P/E Ratio is 17.24 based on a stock price of $16.03 and EPS for 2013 of $0.93. The earnings estimate is probably reasonable and the EPS for the 12 month period ending September 30, 2013 is $0.91. However, the P/E Ratio test says that the stock price is relatively high.

I get a Graham Price of $10.50. The current Price/Graham Price Ratio is 1.53. The 10 year low, median and high median P/GP Ratios are 1.08, 1.30 and 1.44. The ratios are a bit high, but not unreasonable for a utility. The current P/GP ratio at 1.53 says that the stock price is relatively high.

The 10 year Price/Book Value per Share is 1.82. The current P/B Ratio is 3.04, a value some 67% higher. This test says that the stock price is relatively high.

The last test is the dividend yield test. The 5 year median Dividend yield is 7.52%. The current dividend yield at 6.74% is only 10% lower. Ideally, you want the current one to be higher than the 5 year median. However, this test does say that the stock price is reasonable. I often go with the dividend yield test, unless there is a good reason not to. I do not know a good reason not to.

The Globe and Mail has an article on John Heinzl entitled "Beware the risks behind Northland Power's lofty yield". However, despite the title and some negative comment, John Heinzl still recommends this stock.

When all is said and done, I do not like companies that cannot make a profit. I think that should come first and they should only pay dividends that they can afford. See my spreadsheet at npi.htm.

Northland Power Inc. indirectly owns interests in power projects. Northland's assets comprise facilities that produce electricity from "clean" natural gas and "green" renewable sources such as wind and biomass. Electricity generation is sold under long-term PPAs with creditworthy customers, and any fuel for natural-gas-fired projects, where required, is purchased under long-term contracts to assure stability of operating margins. This company operates in Canada, US and Germany. Its web site is here Northland Power.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, November 14, 2013

Keyera Corp 2

I am putting up on my other blog my notes from the World Money Show 2013 in Toronto. I will put up these notes as I transcribe them here.

I do not own this stock Keyera Corp (TSX-KEY, OTC-KEYUF). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010 on Dividends and Special Dividends. The title of the article in Investor's Digest was Dividend Stocks: Buy, Hold and Collect. Jennifer is now a Portfolio Manager for Manulife Asset Management Limited. This stock was also talked about at the recent World Money Show in Toronto. Everyone seemed to love this stock.

Over the past year there has been $0.3M of insider selling and $0.1M of insider buying with $0.2M of net insider selling. There is some insider ownership with the CEO having shares worth some $21M and an officer having shares worth $13M. Their long term incentive plan is an expense and therefore affects earnings.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.14, 16.52 and 19.90. The current P/E Ratio is 29.36 based on a current stock price of $59.90 and 2013 EPS estimate of $2.04. I get a current Graham Price of $23.13 and the current Price/Graham Price Ratio is 2.59. The 10 year low, median and high median P/GP Ratios are 1.00, 1.27 and 1.54. Both these stock price tests say that the current price is relatively quite high.

The 10 year median Price/Book Value per Share Ratio is 2.14 and the current P/B Ratio is 5.14 a values some 140% higher. This stock test also says that the stock price is relatively very high. I took a look at the P/S Ratio and the P/CF Ratio and they all say that the stock price is relatively very high. It is also high on an absolute basis. A P/E Ratio of 29.36 is very high for a utility stock as is the P/GP Ratio of 2.59.

When I look at the analysts' recommendation I get Buy and Hold recommendations. There are even numbers of both these recommendations, so the consensus recommendation would be a Buy. The consensus 12 month stock price is $64.20. This would imply total returns of 11.19% with 4.01% from dividends and 7.18% from capital gains.

There is an interesting article on Forbes saying that since Keyera Corp's yield is 4% the stock is on sale. The Achieve Global Blogger has an interesting article about Keyera Commitments to Leadership Development. There is also an interesting article by the Top Stock Millionaire on how environmentalists may be winning the battle against Keystone pipeline, but top midstream companies may be winning the pipeline war.

It is obviously a very good company. However, it is very overpriced. See my spreadsheet at hse.htm.

This is the second of two parts. The first part was posted on Wednesday, November 13, 2013 and is available here.

Keyera provides essential services and products to oil and gas producers in western Canada, and markets related natural gas liquids (NGLs) throughout North America. Its web site is here Keyera.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Wednesday, November 13, 2013

Keyera Corp

I am putting up on my other blog my notes from the World Money Show 2013 in Toronto. I will put up these notes as I transcribe them here.

I do not own this stock Keyera Corp (TSX-KEY, OTC-KEYUF). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010 on Dividends and Special Dividends. The title of the article in Investor's Digest was Dividend Stocks: Buy, Hold and Collect. Jennifer is now a Portfolio Manager for Manulife Asset Management Limited. This stock was also talked about at the recent World Money Show in Toronto. Everyone seemed to love this stock.

The dividend yield is good at 4%. The 5 year and 8 year dividend growth rate was 6.9% and 8.2% per year. The latest dividend increase was in 2013 and it was for 11.1%. If you invested in this company today and its continue dividend growth rate was 6.9%, that would mean that in 10 years' time you could be earning 7.8% on your investment.

This was also an old income trust stock. They did not decrease the dividends on changing to a corporation, but instead kept the dividends level for a year before starting to raise them again. The stock is still paying dividends on a monthly basis.

The Dividend Payout Ratios, especially for earnings is high. The 5 year median DPR is 99% earnings and is 54% for cash flow. For the financial year ending in 2012, the DPR for earnings was 120% and for cash flow was 60%. They are expected to be 110% for earnings and 52% for cash flow in 2013. The third quarterly report is in and the analysts seem to be on track as far as earnings go, but the cash flow growth as not been anywhere near as strong as the estimates suggest.

Shareholders have been making money from this stock. The stock is up some 22% in 2013. To date, the 5 and 10 year total return is 35.46% and 24.06% per year with capital gain portion at 27.7% and 16.96% per year and dividend portion at 7.76% and 7.10% per year. Note that in the future, you should expect the dividend portion of the total return to be lower, probably close to 4% per year.

Outstanding Shares have increased by 4.9% and 18% per year over the past 5 and 10 years. Shares have increased due to Debenture conversions, DRIP and Share Issues. Revenue has increased by 15% and 91% per year over the past 5 and 9 years. Revenue per Share has increased by 9.4% and 62% per year over the past 5 and 9 years.

Earnings growth is a bit different from the revenue growth. Here the best growth has been over the past 5 years, rather than prior to the last 5 years. EPS has grown at the rate of 48% per year over the past 5 years and at 15% per year over the past 9 years. However, if you look at 5 year running averages, the growth over the past 5 years is lower at 24% per year.

Operational Profit Margin (CF/Revenue) Ratio has not done as well as revenue either. This ratio hit a high in 2009 and then dropped strongly for 2010 and 2011. It was up by 17% in 2012. So until 2012, this ratio was going in the wrong direction.

Cash flow has been increasing by 8% and 15% per year over the past 5 and 8 years. However, if you look at the 5 year running average over the past 5 years you get a 5 year increase that is better at 19% per year. This company does have some good growth and the best growth is currently coming from revenue.

The Return on Equity was at 14.7% for the financial year of 2012. The ROE has been above 10% for the past 5 years and this is a good sign. Also, the ROE on comprehensive income is at 14.7% for 2012 and this is also good.

As with a lot of utilities, this company has lots of debt. The current Liquidity Ratio is 1.53. It has in the past been below 1.00 and this is not good as a ratio below 1.00 means that the current assets cannot cover the current liabilities. However, it has been above 1.00 since 2011.

The Debt Ratio is 1.46. It was better in 2012 at 1.50. I would prefer it to be at 1.50. This ratio has been falling since the issue of this stock company. It started off fairly high in 2004 at 2.16, but has been coming down ever since. The current Leverage and Debt/Equity Ratios are 3.19 and 2.19. These are rather high, but are quite typical for utilities.

I can see why people like this stock. It has had very good revenue growth and hopefully that will turn up in very good earnings and cash flow growth in the future. The company has certainly had a very good stock price run up for 2013.

This company is into the infrastructure part of the energy sector. The infrastructure part of the energy sector generally has solid and steady earning and can make good money for their shareholders over time. However, this company has not been around that long and they still have not covered their distributions with their earnings. See my spreadsheet at hse.htm.

This is the first of two parts. Second part will be posted on Thursday, November 14, 2013 and will be available here.

Keyera provides essential services and products to oil and gas producers in western Canada, and markets related natural gas liquids (NGLs) throughout North America. Its web site is here Keyera.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Tuesday, November 12, 2013

Innergex Renewable Energy 2

I am putting up on my other blog my notes from the World Money Show 2013 in Toronto. I will put up these notes as I transcribe them here.

I do not own this stock Innergex Renewable Energy (TSX-INE, OTC-INGXF). In 2006 I bought Innergex Power on buy rating and favorable report from TD although it has only been going from 2003. In 2008 I sold Innergex as I did not think that it is a stock I want to hold as dividend increased less than the rate of inflation.

Over the past year there has been $0.2M of insider buying and no insider selling. Caisse de dépôt et placement du Québec owns just under 11% of this company. Insiders own shares in this company. For example the CEO has shares worth $5.6M and the CFO has shares worth $1.1M. A number of officers also own shares.

You cannot look at relative Price/Earnings Ratios on this stock because the last 3 years the company had negative earnings. The current P/E Ratio at 23.15 is rather high for a utility company. The current stock price is $9.26 and the 2013 earnings estimate is $0.40. The estimate would appear reasonable as the 12 month EPS to September 30, 2013 for this stock is $0.39. Certainly earnings are going in the right direction.

I get a Graham Price of $6.63 and the 10 year low, median and high median Price/Graham Price Ratios are 1.14, 1.32 and 1.51. The current P/GP Ratio is 1.40. This shows that the stock price is relatively high. Also, 1.40 is a high P/GP Ratio for a utility company on an absolute basis.

The 10 year Price/Book Value per Share Ratio is 1.55 and the current P/B Ratio is 1.90, a value some 23% higher. This current P/B Ratio suggests that the stock price is relatively high.

Generally for old Income Trust stocks, I do not use the Dividend Yield stock price test. This is because for a lot of income trusts, including this one, dividends were cut when the company became a corporation. However, for this stock, the 5 year median dividend yield is 7.4% and the current is some 15% lower at 6.26%. Generally a high stock price is when the current dividend yield is more than 20% higher than the 5 year median. However, this also shows that the stock price is relatively on the high side.

The analysts' recommendations are Strong Buy, Buy and Hold. The consensus recommendation would be a Buy. (This sort of recommendation covers most of the stock on the TSX and therefore is extremely common.) The 12 months stock consensus stock price is $10.50 and this implies total returns of 19.65%, with 6.26% from dividends and 13.39% from capital gains.

The Stockhouse news site talks about the good third quarterly results for this company. A Globe and Mail article talks about Canada's independent power companies having a dismal year in 2013 because of the expectations that interest rates are on the rise. The site Ticker Report talks about Scotiabank raising the 12 month stock price on this stock with a sector perform rating. It also talks about BMO changing their rating from outperform to market perform. (Both sector perform and market perform is a buy rating and outperform is a strong buy rating. See my blog for more information on analyst ratings.)

I still like companies I invest in to be earning money. This stock has had too many years of losses recently and two quarters of profit does not convince me the company can earn money. Not only do I want a company earning money, but I would like their earnings to cover their dividends with a proper Dividend Payout Ratio. See my spreadsheet at ine.htm.

This is the second of two parts. The first part was posted on Monday, October 11, 2013 and is available here.

Innergex is involved in Canada's renewable energy industry. The Company develops, owns and operates facilities located in North America, leveraging run-of-river hydroelectric power generating facilities, wind farms and photovoltaic solar parks. Its web site is here Innergex.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Monday, November 11, 2013

Innergex Renewable Energy

I am putting up on my other blog my notes from the World Money Show 2013 in Toronto. I will put up these notes as I transcribe them here.

I do not own this stock Innergex Renewable Energy (TSX-INE, OTC-INGXF). In 2006 I bought Innergex Power on buy rating and favorable report from TD although it has only been going from 2003. In 2008 I sold Innergex as I do not think that it is a stock I want to hold as dividend increase less than inflation. After a few missteps because of analysts' reports, I am leery of acting on any now. Currently I look at them for information, not for any recommendations.

I would like to get into some alternative energy companies, and this one might be in the future something I would like, but it is not one I would buy now. It is an old income trust and it is not doing badly as it is throwing off a good dividend at a yield of 6.26%. I do not expect a lot from high dividend payers, but I would like to see growth in dividends at the rate of inflation at a minimum.

When this company started they were increasing the dividend at around the rate of inflation. However, as a corporation, they had to get their Dividend Payout Ratios into proper alignment. The DPR for EPS is off the charts. However, the DPR for cash flow is getting into line with the DPR for 2012 at 88% and the expected DPR for 2013 at 60%.

Their revenues are growing and this is good. They just cannot make a profit. Not only that, the Operational Profit Margin Ratio is going in the wrong direction although they had a turnaround in 2011 after it dropped some 55% in 2010. It is up again in 2012. The OPM also seems to be improving in 2013.

The outstanding shares have increased by 17% and 15% per year over the past 5 and 10 years. They have increased due to Share Issues, DRIP and Stock Options. As a shareholder, you would be interested in things like Revenue growth, but most also be very interested in things like Revenue per Share growth because of the big increase in outstanding shares.

Revenue growth is at 35% and 27% per year over the past 5 and 10 years. Revenue per Share growth is very good at 15% and 10% per year over the past 5 and 10 years. Earnings have gone nowhere. Since the company has had an earnings lost for the past 3 years, you cannot measure growth. Even looking at 5 year running averages you get an earnings loss. This occurs for EPS and Net Income.

Also having negative earnings means that you also have no return on assets or earnings.

The Liquidity Ratio has often been low, and including the cash flow after dividends has not helped much as they have sometimes paid out more in dividends than they had in cash flow per share. During the last 3 years, the ratio has been above 1.00. If it is below 1.00, it means that the current assets cannot cover the current liabilities and this is not a good position to be in.

The Debt Ratio has been steadily coming down. It started at 3.49 in 2003 and is currently at 1.39. It was 1.42 in 2012. I would prefer to see this ratio at 1.50. Leverage and Debt/Equity Ratios at 3.38 and 2.38 in 2012 is pretty much in line with other utilities.

As this is an alternative energy company, I plan to continue to track it. I have hope that it might be a good stock in the future. Shareholders have made money over the past 5 and 10 years, but a lot of what they have earned is in distributions. The 5 and 10 year return to date is 16.29% and 7.48% per year with 8.28% and 7.01% from dividends and 8.00% and 0.46% per year from capital gains. See my spreadsheet at ine.htm.

This is the first of two parts. Second part will be posted on Tuesday, October 12, 2013 and will be available here.

Innergex is involved in Canada's renewable energy industry. The Company develops, owns and operates facilities located in North America, leveraging run-of-river hydroelectric power generating facilities, wind farms and photovoltaic solar parks. Its web site is here Innergex.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Friday, November 8, 2013

Brookfield Asset Management

I am putting up on my other blog my notes from the World Money Show 2013 in Toronto. I will put up these notes as I transcribe them here.

I do not own this stock Brookfield Asset Management (TSX-BAM.B, NYSE-BAM), but I used to a long time ago. I bought this stock as Hees International in 1987 and more in 1988, 1989 and 1990. At first dividends were semi-annual and there was some good dividend increases.

There was a much lower dividend increase in 1991. Between 1991 and when I sold in 1999 there was no dividend increases. The stock was going nowhere, so I sold. I made a total return of 3.69% per year. My capital loss was 1.18% per year. My dividend was 4.87% per year.

Dividends are paid in US currency. What this means for Canadian investors are that the dividends will vary and you can never be exactly sure how much you are going to receive. A lot of companies have had problems after 2008 and this company is no different. This shows up in dividend increases.

Over the past 5 and 10 years, dividends have increased by 3.38% and 6.07% per year in CDN$. Over the past 5 and 10 years dividends have increased by 3.19% and 11.06% per year in US$. The current dividend is 1.5% and the increases are quite low with a quite low dividend. This means that even at 11% increase, after 10 years you would only be earning some 4.3% on your original purchase price if the stock was purchased today. The last dividend increase in 2013 was for 7.7%.

Both earnings and cash flow do fluctuate, but the Dividend Payout Ratio is quite reasonable at a 5year median of 28% for earnings and 23% for cash flows. The one for the financial year of 2012 is similar. For the financial year ending in 2013 it appears higher because of the special dividend of units of a newly created company named Brookfield Property Partners L.P.

Shareholders in Canada have had a total return to the end of 2012 over the past 5 and 10 years of 2.93% and 17.74% per year. The shares have increased by almost 14% year to date. If you look at total return to date, the 5 and 10 years return would be at 19.29% and 16.92% per year with 17.10% and 13.41% per year from capital gains and 2.19% and 3.52% per year from dividends. The big change between the 5 years to 2012 and 5 years to date is because the shares when down some 36% in 2008.

If you look at 5 year running averages, the Revenue and Cash Flows have been growing nicely, but not so much the earnings. The 5 and 10 year growth in Revenue is 20% and 23% per year using 5 year running averages in US$. The 5 and 10 year growth in Cash Flow is 9% and 18% per year using 5 year running averages in US$. The 5 and 10 year growth in EPS is 4% and 17% per year using 5 year running averages in US$.

Debt Ratios are fine, but the Return on Equity is low with the 5 year median at 6.2% and the ROE for 2012 also at 6.2%. However, the ROE on Comprehensive Income is higher, but still not very high, at 8.7% for 2012.

The analysts' recommendations are Strong Buy, Buy and Hold. The consensus recommendation would be a Buy. The 12 month consensus stock price is $40.80. That gives a total return of 0%, with a capital loss of 1.5% and a dividend of 1.5%.

The 5 year low, median and high median Price/Earnings Ratios are 12.54, 16.46 and 18.23. The current P/E Ratio is 18.98 on a 2013 earnings estimate of $2.18 CDN$ and Stock price of $41.42 CDN$. I get a Graham price of $37.29. The 10 year low, median and high median P/GP Ratios are 0.83, 1.06 and 1.35. The current P/GP Ratio is 1.11. The P/E Ratio says that the price is a bit high and the P/GP Ratio says that the price is reasonable.

The 10 year Price/Book Value per Share Ratio is 1.89 and the current P/B Ratio is 77% of this at 1.46. The 5 year median dividend yield is 1.89% and the current dividend yield is 1.51 a value some 20% lower. The P/B Ratio says the price is cheap and the dividend yield says that the price is high. I go with the dividend yield and say high.

Zacks says that this company is nearing a bottom and has rising estimates so it is a buy. I think it has had some good growth, but the price is rather high. See my spreadsheet at bam.htm.

This Canadian Asset Managing company invests in and operates a variety of assets on its own behalf as well as co-investors. It is focused on property, power and infrastructure assets. It operates in Canada, US and internationally. The subsidiaries of the Company are Brookfield Homes Corporation, Brookfield Properties Corporation, BPO Properties Limited, Multiplex, Brookfield Power Inc., Great Lakes Hydro Income Fund, Brascan Brasil, S.A., Brascan Residential Properties, S.A. and Brookfield Investments Corporation. Partners Ltd owns 17%. Its web site is here Brookfield.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, November 7, 2013

Johnson and Johnson 2

I am putting up on my other blog my notes from the World Money Show 2013 in Toronto. I will put up these notes as I transcribe them here.

I do not own this stock Johnson and Johnson (NYSE:JNJ). I bought some of this stock in June 2005 and realized a year later, in June of 2006 that it was going nowhere for me and sold. I lost almost 17% of my investment. When I bought in 2005, all the analysts were saying that it was a good buy at that time.

When I look at insider trading on the NASDAQ site, I find 4 sells in the last 3 months totally $2.8M. This is rather negative. According to the most recent proxy notice, the current President had total rewards, including salary, bonus and options of $11.5M and the vice president of finance had total rewards including salary, bonus and options of $5.5M. I find it harder to find insider ownership for US companies than Canadian ones, but that may just because I know better where to look for Canadian information.

The Price/Earnings Ratios for this company has been going south. The 5 year low, median and high median P/E Ratios are 12.11, 13.90 and 15.69. The 10 year low, median and high median P/E Ratios are 16.32, 17.57 and 18.82. I get a current P/E Ratio of 23.58 based on a 2013 EPS of $3.96 and a stock price of $93.37. This is the only estimate for EPS I could find. If you use the 12 month EPS to September 2013 of $4.48, the P/E is better at 20.84 as the 12 month EPS is $4.48. This P/E is still higher than the 5 and 10 year median P/E Ratios of 13.90 and 17.97.

If you use the 10 year median P/E Ratios for Adjusted EPS compared to the Adjusted EPS for 2013, the current P/E ratios is 17.04 compared to the P/E Ratio median of 12.93. The 10 year high median P/E Ratio is 14.03. So however you look at P/E Ratios, the current ones seem to be relatively high.

I get a Graham Price of $4.03. The 10 year low, median and high median Price/Graham Price Ratios are 1.59, 1.71 and 1.88. The current P/GP Ratio is 2.17 based on the stock price of $93.37. This test also says that the stock price is current relatively high.

The 10 year Price/Book Value per Share is 4.16 and the current P/E at 4.49 is just 8% higher. This says that the stock is relatively reasonable.

The 5 year median dividend yield is 3.46% and the current dividend yield is some 18.3% lower at 2.83%. Generally, for the stock price is to be considered high in this test the current dividend yield has to be 20% lower than the 5 year median. It is close but not quite there.

The only stock test that gives a good view of the current stock price is looking at historical dividend yields. By this measure the stock price is cheap as the current dividend yield is below the midpoint of the historical high and low dividend yield. This historical average dividend yield is 2.35% and this is lower than the current dividend yield of 2.83%.

When I look at analysts' recommendations I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month target stock price is $95.40. This would imply a total return of just 5%, with 2.83% from dividends and 2.17% from capital gains. (Makes you wonder about the buy recommendations with such a low 12 month consensus stock price.)

There is an interesting article in International Business Times about Johnson & Johnson And Its Subsidiaries having to Pay $2.2B Over Claims Of Fraudulent Marketing, and kickbacks relating To Heart Drugs and Antipsychotics drugs. There are a lot of sites talking about this.

There is a recent positive blog entry by Dividend Monk on this stock. He says that Johnson and Johnson is often viewed as the quintessential blue chip stock. He thinks that the current price is fair but not ideal. See my spreadsheet at hse.htm.

This is the second of two parts. The first part was posted on Wednesday, November 6, 2013 and is available here.

Johnson & Johnson is engaged in the manufacture and sale of a broad range of products in the health care field in many countries of the world. The company's worldwide business is divided into three segments: Consumer; Pharmaceutical; and Professional. Its web site is here Johnson and Johnson.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.



This is the first of two parts. Second part will be posted on Thursday, November 7, 2013 and will be available here.

Wednesday, November 6, 2013

Johnson and Johnson

I am putting up on my other blog my notes from the World Money Show 2013 in Toronto. I will put up these notes as I transcribe them here.

I do not own this stock Johnson and Johnson (NYSE:JNJ). I bought some of this stock in June 2005 and realized a year later, in June of 2006 that it was going nowhere for me and sold. I lost almost 17% of my investment. When I bought in 2005, all the analysts were saying that it was a good buy at that time.

As Canadians, we are told we should be buying US stocks for our portfolio. It is often recommended that we have at least 25% of our portfolio in US stocks. I have never followed this, although I have tried dipping into the US market, but I have never made any money there.

First let us talks dividends. This company has done well by its shareholders in dividend growth. However, for US shareholders the growth is better at 8.2% and 11.7% per year growth over the past 5 and 10 years. The growth for Canadian is 8.4% and 6.7% per year over the past 5 and 10 years. Growth should be better for Canadians going forward as our currency drops against the US dollar.

They have increased the dividends since 2008 by increasing the Dividend Payout Ratio for Earnings from under 40% to 62% in 2012. However, they have neatly sidestepped this issue by using an adjusted EPS. Using the Adjusted EPS, DPR ratios are lower at 47%. However, DPR for cash flow has also been increasing from under 30% to 43% for 2012.

Analysts have bought into the Adjusted EPS and I can find no estimates for EPS, just for Adjusted EPS and the Adjusted EPS are substantially higher. For 2012 EPS was $3.86 compared to Adjusted EPS at $5.10. If you look at growth, Adjusted EPS has done better also. Using the 5 year running average over the past 5 years the increase for EPS is 5.6% per year and for Adjusted EPS it is 7.1% per year.

Has this stock made money from its shareholders is another question to ask. Until recently, the 5 year periods from 2002 to date have not been good for Canadian shareholders. In 2002, the 5 year total return was 14.26% per year. Until 2012, the 5 year returns were very low or negative. The 5 year period ending in 2012 had total returns of 4.44% per year. The stock has gone up over 30% so far this year. The 5 year period to date has total earnings of 8.67% per year.

The 10 year total return to the end of 2012 was a miserable 0.55% per year. There was some 2.36% from dividends per year and a capital loss of 1.81% per year. The 10 year total return to date is better at 6.54% per year. There was 2.47% per year from dividends and 4.07% per year from capital gains.

US shareholders did slightly better with total returns to the end of 2012 at 4.07% and 5.52% per year. The portion from capital gains was at 1% and 2.81% per year and the portion from dividends at 3.07% and 2.7% per year. The Total Return to date is also better for US shareholders at 12.44?% and 8.99% per year with 9.30% and 6.31% per year from capital gains and 3.14% and 2.68% per year from dividends.

The outstanding shares have increased by 1.7% and .5% per year over the past 5 and 10 years. Shares have increase because of Stock Options and Share Issues and have decreased due to Buy Backs.

Using the 5 year running average, the growth in Revenue to the end of 2012 was 5.64% and 7.97% per year. This is respectable. Analysts expect that revenue will increase by 5.46% this year. The 12 month revenue to the end of September 2013 shows an increase of 4.9% above the revenue to the end of 2012.

Analysts expect the adjusted EPS to increase by 7.5% for 2013 and the Adjusted Earnings to the end of September 2013 compared to the end of 2012 shows an increase of 7.25%. The analysts' estimates do seem reasonable.

The Return on Equity has always been good and above 10% for this stock. The ROE for 2012 was at 16.2%. The 5 year median ROE is at 23.6%. The ROE on comprehensive income is close in 2012 with the ROE on comprehensive income at 16.5%. There have been some large variances in the past between Net Income and Comprehensive Income.

The last thing to discuss is debt ratios. The Liquidity Ratios have generally been very good with the ratio at 2012 at 1.90. The Debt Ratio is also good at 2.15. The Leverage and Debt/Equity Ratios are also good for 2012 at 1.87 and 0.87.

This certainly is a dividend growth stock. However, I think that the DPRs are getting too high as they have been increasing at a higher rate than earnings and cash flow. Also, what I do not like about this company is that the quarterly reports only give earnings and sales. The company does not provide full financial statements. See my spreadsheet at hse.htm.

This is the first of two parts. Second part will be posted on Thursday, November 7, 2013 and will be available here.

Johnson & Johnson is engaged in the manufacture and sale of a broad range of products in the health care field in many countries of the world. The company's worldwide business is divided into three segments: Consumer; Pharmaceutical; and Professional. Its web site is here Johnson and Johnson.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.